And now we begin Part Two of Debate in Rome. The subject today is Balance Sheet Risk, Cicero versus Coughlin, Munis versus BOLI. On the subject of Balance Sheet Risk, Cicero, the floor is yours.

Balance Sheet Risk: We represent an investment brokerage house that specializes in helping bank CFOs create a portfolio that minimizes balance sheet risk. While your municipal portfolio can go up and down in value based on interest rate changes, trading activity in the bond, and other things, we can help the bank minimize portfolio value volatility.

Balance Sheet Risk: I can help you make an allocation to a BOLI asset that is not impacted by changes in the value of the underlying investments. I believe the risk that interest rates will increase is greater than the likelihood they will go down, and consequently, it is wiser to make an allocation to an asset where the risk of balance sheet impairment can be transferred to a 3rd party, in this case and insurance company.

Mr. Coughlin, I want to caution you that simply inserting “and” into a single sentence simply to extend the sentence is a breach of the two sentence rule.

On the subject of Balance Sheet Risk, by a show of hands who thinks Muni bonds are better?

That is it for Part Two of Debate in Rome. The subject was Balance Sheet Risk: Munis vs Boli, Cicero vs Coughlin. Coughlin and BOLI win. In Part Three, they will debate Cost to Acquire Asset: Munis vs BOLI, Cicero vs Coughlin

About The Author

Kelly Coughlin is a CPA and CEO of BankBosun, a management consulting firm helping bank C Level Officers navigate risk and discover reward. He is the host of the syndicated audio podcast, BankBosun.com. Kelly brings over 25 years of experience with companies like PWC, Lloyds Bank, and Merrill Lynch. Kelly earned his undergraduate degree (BA) from Gonzaga University and a master’s degree in business administration (MBA) from Olin Graduate School of Business at Babson College in Wellesley, MA. Kelly lives in Edina, MN.